Lease-backed ABS set pendulum swinging in Italy

The dormant Italian ABS market just barely saw some deal action last month. The slow start in primary issues was jumpstarted by repeat Italian-based issuer Biella Leasing, which launched its EURO199 million ($171 million) deal, Secursel 2, at the very end of the month. Figures in 2001 indicate this is a prospering asset class in the Italian market, with Italian leases accounting for more than 13% or EURO4.2 billion ($3.6 billion) of total Italian ABS volumes.

The deal is offered over two floating-rate tranches above a EURO2.66 million ($2.3 million) unrated equity piece. The class B notes priced one basis point within the Class A, at 33 basis points over the three-month Euribor, due to the wrap provided by the European Investment Fund. In line with the typically diverse asset classes present in lease transaction portfolios, this deal holds 44.2% of real-estate assets; 26.7% of equipment leases; 22.4% of auto leases and 6.6% of truck leases. The transaction keeps in line with the 2001 trend that saw real-estate holdings take a more prominent role in portfolios.

On the larger European scale this activity appears grander; Italian lease securitizations in 2001 account for 85% of the overall European lease securitization activity. Seven Italian transactions were completed last year. "Italy remains the only country in Europe to securitize lease receivables, thus providing funding options for lease companies that have experienced high growth rates in the past three to four years," reported Moody's Investors Service in its 2001 review and 2002 Outlook on the Italian structured finance market.

To be sure the Secursel 2 transaction is just the beginning, with two additional lease securitizations launching in the coming months. According to market sources, Bipop-Carire and Centro Leasing are both likely candidates to issue in the near future.

And if there is any doubt that Italian securitizations are on a roll, just look to figures from 2001 to tell the tale. Italy managed to almost triple ABS volume to EURO31.85 billion ($28.4 billion) from EURO11 billion ($9.5 billion) the year before and it appears that the Italians have much more in store for 2002. According to Moody's, 2002 is expected to keep the momentum swinging with a total forecasted issuance of EURO20 billion ($17.2 billion) to EURO30 billion ($26.8 billion) that includes 40 to 60 transactions.

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